Federal Budget Updates 2022

This bright industry is constantly evolving and growing at a rapid pace. In our previous Federal Budget Updates blog from 2019, we had discussed updates that were made to the CMHC First Time Home Buyer’s Incentive Plan and Home Buyer’ plan RRP Increase. We will be diving a bit deeper into a few key updates from 2022. As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding the Federal Budget Updates 2022.

On April 7, 2022, the Deputy Prime Minister and Finance Minister, the honourable Chrystia Freeland, presented Federal Budget Updates 2022: A Plan to Grow Our Economy and Make Life More Affordable, to the House of Commons. No changes were made to personal or corporate tax rates, nor to the inclusion rate on taxable capital gains.

Some highlights that are included in this Federal Budget Updates are:

• Federal Budget Updates: Retirement Plans

  • Borrowing by Defined Benefit Pension Plans

    • Budget 2022 proposes to provide more borrowing flexibility to administrators of defined benefit registered pension plans (other than individual pension plans) for amounts borrowed on or after April 7, 2022

  • Reporting Requirements for RRSP’S AND RRIF’S

    • Budget 2022 proposes to require financial institutions to annually report to CRA the total fair market value of property held in each RRSP and RRIF at the end of the calendar year. This information would assist CRA in its risk-assessment activities regarding qualified investments held by RRSPs and RRIFs. This measure would apply to the 2023 and subsequent taxation years

  • Federal Budget Updates: Personal Measures

    • Homebuyer’s Tax Credit

    • By claiming this credit, first-time homebuyers can obtain up to $750 in tax relief as a non-refundable tax credit. Budget 2022 proposes to double the Home Buyers’ Tax Credit amount such that eligible homebuyers can access tax relief of up to $1,500. This measure would apply to acquisitions of a qualifying home made on or after January 1, 2022.

    • Multi-Generational Home Renovation Tax Credit

    • Budget 2022 proposes a new refundable tax credit to support constructing a secondary suite for an eligible person to live with a qualifying relation. An eligible person would be a senior (65+ years of age at the end of the tax year when the renovation was completed) or an adult (18+ years of age) eligible for the disability tax credit. A qualifying relation would be 18+ years of age and a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the eligible person (which includes the spouse or common-law partner of one of those individuals). This tax credit would provide tax relief of 15% on up to $50,000 of eligible expenditures, providing a maximum benefit of $7,500.

    • Tax-Free First Home Savings Account (FHSA)

    • See below…

The Federal Budget Updates 2022 propose to create the Tax-Free First Home Savings Account to help first-time homebuyers save up to $40,000 for their first home. Contributions to an FHSA would be deductible (like an RRSP), and income earned in an FHSA and qualifying withdrawals from an FHSA made to purchase a first home would be non-taxable (like a TFSA).

The lifetime limit on contributions would be $40,000, subject to an annual contribution limit of $8,000. Unused annual contribution room would not be carried forward. Individuals would also be allowed to transfer funds from an RRSP to an FHSA tax-free, subject to the $40,000 lifetime and $8,000 annual contribution limits.

Withdrawals for purposes other than to purchase a first home would be taxable. However, an individual could transfer funds from an FHSA to an RRSP (at any time before the year they turn 71) or an RRIF on a non-taxable basis. Transfers would not reduce, or be limited by, the individual’s available RRSP room. Withdrawals and transfers would not replenish FHSA contribution limits.

Individuals would not be permitted to make both an FHSA withdrawal and a home buyers’ plan withdrawal concerning the same qualifying home purchase. If an individual has not used the funds in their FHSA for a qualifying first home purchase within 15 years of opening an FHSA, their FHSA would have to be closed. Any unused funds could be transferred into an RRSP or RRIF or would otherwise have to be withdrawn on a taxable basis.

The Federal Budget Updates would work with financial institutions to allow individuals to open an FHSA and start contributing in 2023.

 It is VERY important to have a clear understanding of what these Federal Budget Updates are and how they can affect you. It makes all the difference in future planning and can impact you in very significant ways.

At GLM Mortgage Group, we know what questions to ask about the Federal Budget Updates. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you. We want you to make the best decision possible on the mortgage that you are committing to. Call us anytime for a FREE consultation on the mortgage products available to you.

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Rent to Own Mortgage

A Rent to Own contract could be the answer for someone who is renting but is also having a hard time getting their down payment together. Rent to Own contracts usually are between 1 and 5 years long and can give the client the time they need to implement strategies on increasing their down payment or even improving their credit.  As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding Rent to Own Mortgages.

In the Lower Mainland, Rent to Own is becoming more popular as housing prices are increasing, and renting seems inevitable. In fact, there are properties that are being built with Rent to Own financing in mind.

Initially, the contract is signed just between the renter (the buyer) and the Landlord (the seller) that states an agreed price, length of time of Rent to Own, and market rent (typical rent of a similar property) with the excess going toward down payment (usually $200 – $400/month). The lender is not involved yet.

For example, market rent for your property goes for around $1000.00. You agree to pay the Landlord $1400.00/month. The extra $400/month goes into an account that the Landlord has in place for you for the down payment. This is a great example of  a Rent to Own situation.

Regardless of the lender, the Landlord must keep pristine records of the extra money coming in and can show the history of any excess deposit. When the Rent to Own is registered on title, there will be a clear indication as to how much of the monthly payments are directed toward the deposit.

The client will want to work with a team of property purchase professionals that will strategize Action Steps to make a seamless Rent to Own experience. The client`s team would be:

1. MORTGAGE PROFESSIONAL

• Get pre-approved! In the pre-approval process, the Mortgage Professional will be able to advise on improving credit or the need to increase employment income if need be.
• As well, the Mortgage Professional understands lender policies and guidelines for Rent to Own contracts and will be able to advise on how to properly set up the Rent to Own.

2. SOLICITOR/LAWYER

• Make sure that your lawyer is familiar with Rent to Own contracts and that they work closely with the Mortgage Professional who knows what the lender is going to expect. This relationship is very important and one that should not be overlooked.

The down payment continues to grow over the life of the Rent to Own contract. At any time, you can add lump payments to the down payment, simply by giving the Landlord a bigger rent check. Keep in mind, the Rent to Own contract could stipulate that the down payment is non-refundable. Make sure you read the fine print and work closely with your mortgage professional and lawyer so that you clearly understand the terms of your Rent to Own contract.

The bank does not get involved until the time the renter (the buyer) makes an offer to purchase to the Landlord (the seller). The person paying for the rent to own does not have to qualify for a mortgage at this point because the Landlord continues to carry the mortgage on the property.

Rent to Own Properties can also be facilitated through a company such as a condominium developer. For example, the developer could offer a Rent to Own contract when entering a rental lease with an owner-occupied property that the client wants to rent.

The client may be charged a contract fee upfront (for example $10,000) to enter the Rent to Own contract. At times all or a portion of this contract fee can be used toward the down payment pending on what has been negotiated within the Rent to Own contract.

Over the course of the Rent to Own some of the obstacles to financing you will consider are:

• How to improve your credit rating
• Consider applying for an RRSP loan to further establish credit and take advantage of tax benefits
• Consider refinancing any outstanding credit
• Consider job changes to increase employment income
• Consider other sources to increase down payment

Rent To Own contracts are more than just paying rent to the Landlord and applying the rent toward the purchase of the property. There are details that you need to know when entering into a Rent To Own Contract. If you need help setting up a Rent to Own contract or for more information regarding this topic please reach out.

GLM Mortgage | Dominion Lending Centres is here to walk your mortgage planning path with you. Give us a call at 604-259-1486 and find out what your mortgage options are!

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Mortgaging a Property via Assignment

Mortgaging a property via assignment is a contract provision included in some real estate transactions that allow the buyer to resell or transfer a property to another buyer before the deal’s closing date. As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding Mortgaging a Property Via Assignment.

This product was originally intended to give buyers a legal way of backing out of a purchase if for some reason their circumstances changed after they had put an offer on a property, instead of having to surrender their deposit. The clause was also meant to protect sellers, ensuring a sale would still go forward if another buyer could be found.

To qualify for a product like an Assigned Mortgage, there are some things you will want to first consider:

• Not all lenders offer to finance for Assignment Purchases
• Assignment Purchase products will contain the same features and conditions that you would expect of a traditional standard mortgage qualification
  • This means income and credit score requirements remain the same
• There will likely be additional documentation that will be required
  • Pertaining to the Purchase Contract and Contract of Assignment
• Some lenders will only finance on the original purchase price

The assignment clause allows real estate agents to sell a contract for a single property multiple times at increasingly higher prices as they make a commission on each transfer. Buyers in the middle also benefit by pocketing the difference between what they paid and the resale value. They also don’t pay any land-transfer taxes because the entire transaction happens before the deal officially closes, so the property is never technically in their possession.

The original seller receives less than what the property ends up being worth and the last buyer may be paying an inflated price, with the difference in value going to the real estate agent and the buyers in the middle.

The option of an Assigned Mortgage can be appealing to borrowers for a few different reasons:

1. Depending on how far along the process is, you could possibly be involved in choosing finishes of the property
2. Depending on your local market, you could score a good deal on an assignable property

The risk to individuals and developers, regardless of incorporation or not, is that the CRA is aggressive on assignments and will often investigate GST compliance long after the transaction has occurred. This leaves the taxpayer at high risk with a large tax liability if the sale of an assignment fee was not properly documented for GST purposes. As always, remember to consult a qualified tax professional with regards to your potential exposure and ensure that GST is reported correctly along the sequence of transactions.

Let’s look at this case study on Mortgaging a Property via Assignment together…

A real estate agent’s client reaches a deal to sell a property to an initial buyer for $1 million. The agent then takes that contract and resells it to a second buyer for $1.5 million. The agent in turn goes to a third and final buyer and sells the contract for $1.8 million.

For each transaction, the agent receives a commission. The initial seller receives $1 million minus the agent’s commission. The first buyer who bought the contract for the property for $1 million and sold it for $1.5 million pockets $500,000. The second buyer who bought the contract for $1.5 million and sold it for $1.8 million gets $300,000. The third buyer pays the land-transfer tax on the $1.8 million purchase price.

For any issues with Mortgaging a Property via Assignment please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice.

At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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Our Discovery Call

A Discovery Call is our first touchpoint with your client. We make a quick 5–10-minute phone call to simply connect with the client and gather some basic information regarding a mortgage pre-approval. After we ask the client all necessary intake questions, we will either send them a link to our online application form OR create and give them a custom game plan for the future.

Once your client completes the online application, we will have a more thorough knowledge of the client, giving us access to the client’s Credit Bureau, etc… We will use these details to create a custom plan for your client.

A few questions that we will always ask during a Discovery Call are:

• Employment
  • Are they an employee or self-employed?
  • What is their annual income?
  • Do they receive any additional income?
• Property
  • What price range suits their needs?
  • Are they currently working with a realtor?
  • What type of property appeals to them?
• Credit
  • What is their credit like?
  • Have they ever had issues (past or present) with collections/bankruptcies?
  • Do you have any car/student loans?
• Down Payment
  • Do they have any funds saved for the down payment? How much?
  • Where did this down payment come from? How long have they had it?
  • Are they a First Time Home Buyer?

Our online application can be completed from your mobile phone, laptop, or tablet. Your client’s application stays “live” for 36 hours. To put it simply, this means that the application can be re-opened and closed at the client’s convenience to ensure all information is filled out in the given period. It’s not uncommon for us to send a reminder to your client to finish the app before the 36-hour deadline ends or reach out to us for any help.

Through every step of our Discovery Call process, we update both the realtors and clients. We provide the realtor a quick summary email giving our professional opinions on what we think their client can afford after we connect on the phone. We also update the realtor when the pre-approval is completed. As for the clients, they are receiving multiple calls/emails from us along the way keeping them up to speed. Our clients can feel at ease knowing that WE are on top of things taking care of them!

During our Discovery Call, when we are asking our intake questions, we can usually gather a rough idea of their projected purchase price with their liabilities accounted for.

For example:

• Every $20,000 of income earns approximately $100,000 borrowing power
• Every $13,000 of credit card/ line of credit debt subtracts approximately $100,000
• Every $400 monthly car payment subtracts approximately $100,000 borrowing power

Let’s review this case study…

Joe Smith earns $80,000 per year. His wife Sarah earns $60,000 per year. The total household income is $140,000 annually. This income is equal to $700,000 borrowing power. The couple has one car payment at $400 a month. They have about $6,000 in credit card debt collectively.

These liabilities decrease the couple’s borrowing power by $150,000, leaving them able to borrow $550,000. Joe and Sarah do have $75,000 in savings. We add their savings to their purchase power, and they are now able to look for properties in the price range of $625,000. Discovery call.

If having us reach out to YOUR clients for a discovery call is something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. Fr

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First Time Home Buyer’s Program

The First Time Home Buyer’s Program otherwise referred to as the FTHBI is a Canadian Government program, which contributes up to 10% to the down payment for First Time Home Buyers. This is an effort to support borrowers in their first home purchase to reduce their monthly mortgage payments, without contributing to their financial burdens. This program is a “shared equity” mortgage with the government of Canada, where you put 5% down on an existing home and they match your down payment and put another 5% down for you without any out-of-pocket or upfront costs.  If you are looking at purchasing a newly constructed home, there are options for down payments from 5-10%.

As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding the First Time Home Buyer’s Program.

To be eligible for this government incentive program you must:

• Be a first-time homebuyer
  • Exception if you have been renting and NOT owned a property for the last 4 years
• Total household income must be under $120,000
• You must have the minimum 5% down payment from your own resources
  • This means that the 5% down payment cannot be from a line of credit, loan, or gift.

Some limitations to the program that are non-negotiable are:

• Must be owner-occupied (no rentals)
• Property must be in Canada
• Must be owner-occupied year-round
• Must be an insured mortgage (less than 20% down payment)
• Mortgage can be maximum four times your annual income (or the maximum amount of $480,000 plus down payment)
• Must pay back the “shared-equity” at the time of property sale or within 25 years (whichever comes first)

This program is a popular option in BC with property values coming in at an all-time high and mortgage rates at an all-time low. Although this can be helpful in reducing your monthly mortgage payments, it does come with a few catches. Since the government of Canada will be matching your 5% down payment, they now own 5% equity in YOUR home.

In summary, this means that when you sell your house (or after 25 years) you will be paying 5% of that equity back to the government. This can feel unfair to some people as the value in their home increases, so does the 5% “shared home equity”. If your property is worth more at 25 years (or sells for more than the time of purchase) the “shared home equity” also increases, meaning they could potentially require you to pay back MORE than the original amount they lent to you at the time of purchase.

Let’s have a look at this case study:

• Joe Smith is looking to make his first-time home purchase with his annual income of $85,000. The property he is looking at has a purchase price of $325,000, with his 5% down payment he can put $16,250 down. That brings his requested mortgage amount to $308,750 leaving him with monthly payments of $1,405.
• If Joe Smith decided to use the FTHBI with his annual income of $85,000 to put down $16,250, the government of Canada would chip in the same 5% of $16,250 and now Joe has a down payment of $32,500. Joe’s requested mortgage amount would then be $292,500 leaving him with monthly payments of $1,331.
• If Joe Smith utilized this FTHBI program, he would be saving $22,200 over the life of his mortgage.

FTHBI is a federal government initiative to help first-time homebuyers into the housing market. It is important that you understand the ins and outs of this product and work with a professional Mortgage Broker. Your Mortgage Broker will be able to look at your individual situation and walk you through your options and advise if this product would be of benefit to you.

If you are interested in an First Time Home Buyer’s Program, please click this link, and feel free to use the free tools to help answer any questions you may have.

https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

Please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation for First Time Home Buyer’s Program and give you the best advice.

At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions. If any, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice.. 

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How Mortgage Rates Work

The topic of how Mortgage Rates work is a long, complicated series of moving puzzle pieces that work together perfectly. Today we are going to break it down as best we can. During the process of taking out your first mortgage, you will learn that the interest rate is the “payable fee” your lender has calculated for you in exchange for borrowing their money.

As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding How Mortgage Rates Work.

When applying for a mortgage, the lender you decide to choose may offer various interest rate options. Mortgage rates are constantly changing due to the Canadian economy (Fixed rates) and Global economy (Variable rates). Each time you renew your mortgage term, you re-negotiate your mortgage interest rate… Simply, this means at the time of term renewal, your new mortgage interest rate may cause your monthly payments to increase or decrease.

The lender of your choice will set the interest rate for your mortgage.

Here are a few of the factors that they use to help determine your cost:

• The length of your mortgage term (higher length in the term usually have higher rates)
• Their current Prime and Posted Interest Rate
• If you qualify for a discounted rate
• Type of interest you choose (fixed, variable, or combination)
• Your credit history
• If you’re Self Employed/ Employee

For example, with credit, lenders will assess your bureau report to decide if they will lend you money. They will also use this document to determine how much interest they will charge on the money you will agree to borrow. The better your credit is, the easier it will be for you to get a mortgage. Even if you have poor or little to no credit history, there will always be options like B lenders and private lenders depending on your specific file details.

On the topic of Mortgage Rates, you will very commonly hear three words: Prime, Posted, and Discounted Rates. These are all different. To put it simply, a Prime Rate is the rate the lenders use to determine their posted interest rate. A Posted Rate is the interest rate that the lenders advertise for their products (these can change regularly).

A Discounted Rate is lower than the lender’s Posted Rates. Along with those keywords, there are two more words you will need to know about. These important terms are called Fixed and Variable Interest Rates. A Fixed interest rate will stay the same for the length of your term.

Fixed Mortgage Rates will work the best for you if you need the following:

• Your payments stay the same over the term of your mortgage
• You want to know in advance how much principal you’ll pay by the end of the term
• Keep your interest rate the same because you think market interest rates will go up

A Variable Mortgage Rate can increase and decrease during the length of your term. This means that when you choose a Variable Rate Mortgage, your interest rate may be lower than if you selected a Fixed rate.

This type of Mortgage Rates may be best for you if you can accommodate the following:

• Your interest rate changing
• Your monthly mortgage payments potentially increasing or decreasing

In a Variable Rate Mortgage (commonly referred to as AVRM) the interest rate can go up, meaning more of your monthly payment goes towards the interest and less to the principal. If rates go down, more of your payment goes to the principal, which means you can pay the mortgage off faster.

The best advice on Mortgage Rates is the advice that comes from your Mortgage Broker because they can analyze your needs and start underwriting your information. With their expert advice, together you can create a perfectly “tailored-to-you” plan.

If any of the topics mentioned on Mortgage Rates sound like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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Pre-Approval VS Rate Hold

Pre-Approval VS Rate Hold… what are the differences? What are the benefits? Not even one Mortgage or Pre-Approval Process is the exact same as someone else’s. The Mortgage and Pre-Approval process are complex mazes of tiny puzzle pieces that must fit together seamlessly. Note that the puzzle pieces are constantly changing in this industry. Many lenders will pre-qualify and give Rate Holds to their customers, but that only gives you as a borrower, a general idea of the amount of the mortgage you could afford. However, when you are pre-approved, you’ll have a clear picture of the home you can afford and what you might pay each month.

As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding Pre-Approvals VS Rate Holds.

The “Pre-Approval Approach” is simply a more detailed process. You as a client will be sending in all requested documents for review (besides subject property.) The lender of your choice will have to approve your application based on information such as employment, current debts, down payment, and your previous/current credit history.

Something to keep in mind is that even if all four “pillars” are approved, it is NOT a guarantee that the whole application will be approved. The lender you chose will still need to meet all insurance guidelines if there is less than a 20% down payment.

Since the Pre-Approval process (compared to the Rate Hold process) is quite thorough, there are many benefits to this product. The biggest one is that you will have a general idea of what you can afford even before you shop for a home. Another commonly appreciated “pro” of a Pre-Approval process is that you can ask your Mortgage Broker any questions about current mortgage products on the market and get the best plan for you, before looking at any properties.

A few things to also consider while thinking of starting your Pre-Approval Process are:

• Pulling your credit in the Pre-Approval Process will cause a temporary decline in your credit score
• There is no 100% Guarantee on being approved after a Pre-Approval if circumstances for the borrower or subject property change

A Rate Hold is simply “locking in” a specific mortgage rate for a certain number of days. Most commonly, a general Rate Hold is for 120 days, but 30, 45, 60, and 90-day rate holds are also widely offered by various lenders. A “Rate Hold” only applies to fixed rates since variable rates are constantly fluctuating with the global economy. While the lender you are working with will guarantee a fixed rate for the duration of your “Rate Hold” period, this should NOT be seen as a guarantee that you’ll be pre-approved for the mortgage.

Locking in a fixed rate will come most in handy when mortgage rates are rising, you won’t have to worry since you have your “locked-in” rate. However, if rates decline, you will also have access to the lower mortgage rates that are currently on the market.

Now that we’ve discussed the “pros” here are a few things to consider:

• Not all lenders offer pre-approvals and rate holds
• Rate holds are often shorter for renewals and refinances
• Some promotional rates involve a “no float-down” policy, meaning the lender has locked-in rates that cannot drop, regardless of whether rates are falling in general

Most Rate Hold products are generally automated, which means nobody is even looking at your application. That means any documents you have sent in, won’t be reviewed at this point.

The system will analyze a few key pieces of data from the application like:

• Credit Score
• Loan to Value Ratio
• Name
• Birthdate

The best time for a “Rate Hold” would be for a borrower that is looking to make a Purchase or start a Refinance in the very near future, since the max Rate Hold is usually 120 days. The best Pre-Approvals and Rate Holds are the ones that come from your Mortgage Broker because they can analyze your needs and start underwriting right away. With their expert advice, together you can create a perfectly “tailored-to-you” plan.

If any of the products mentioned sound like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice.

From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions. If any of the products mentioned sound like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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We wanted to give you a brief set of notes regarding the guidelines. This is something you can use and reference whether you are a first-time home buyer or looking to refinance underneath these new guidelines. It gives a clear picture of what/how you are impacted as a buyer or someone who is looking to refinance.

Here’s what you need to know about B-20:

The average Canadian’s home purchasing power for any given income bracket will see their borrowing power and/or buying power under these guidelines reduced 15-25%. Here is an example of the impact the rules have on buying a home and refinancing a home.
 
PURCHASING A NEW HOME

When purchasing a new home with these new guidelines, borrowing power is also restricted. Using the scenario of a dual income family making a combined annual income of $85,000 the borrowing amount would be:

REFINANCING A MORTGAGE

A dual-income family with a combined annual income of $85,000.00. The current value of their home is $700,000. They have a remaining mortgage balance of $415,000 and lenders will refinance to a maximum of 80% LTV. The maximum amount available is: $560,000 minus the existing mortgage gives you $145,000 available in the equity of the home, provided you qualify to borrow it.

Source (TD Canada Trust) 

These guidelines have been in place since January 1, 2018, and we are starting to see the full impact of them for both buyers and those looking to refinance. Statsare showing that there is a slowdown in the real estate market, however, there is also a heightened struggle for many buyers to now obtain approval under these new guidelines. It’s a difficult situation as the cry for affordable housing is still ongoing as the new guidelines may slow down the market but appear to further decrease the borrowing/buying power of individuals.

Keep in mind, this is just a brief refresher course on the B-20 guidelines. As always, if you have more questions or are looking for more information, we suggest that you reach out to your mortgage broker to discuss and get a full and detailed look at how it will impact you personally.

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With that significant accomplishment, you should look at obtaining a Title Insurance Policy. What most people don’t realize is that when you had a mortgage, the lender will likely have had this in place for you. Once your mortgage is paid out in full the insurance is no longer in place. It is crucial that once your final payment is made that you, as a home owner, now get a policy.

What is Title Insurance? Good question!

Title Insurance protects you, the homeowner. It’s not like traditional insurance in that it does not ONLY cover things that might happen, but it also covers things such as property defects that have already occurred in the past.

A title insurance homeowner policy will cover:

• Forgery – If someone forges your signature on a registered document that entitles them to sell or mortgage your home.
• Duty To Defend – If you experience title risk, the policy will cover the legal fees and costs associated with restoring and protecting your title.
• Lack of Building Permits – Prior to purchasing the home, if there were renovations performed without the proper building permits you may be required to remove or fix the structure.
• Fraud – If someone fraudulently transfers your property without your consent.
• Encroachments – If a structure built by a previous owner is outside the property boundaries, or if a neighbour builds a structure that is on your property.

Title Insurance offers you peace of mind if anything should happen to your property once you are the owner.  It is relatively low cost, on average coming in at $200-$400. It is a one-time purchase and does not need to be purchased each year. More than reasonable right?

If you are still on the fence about obtaining title insurance, we’ve recently had a client who experienced title fraud:

A woman went to her bank to make a payment on a line of credit that was secured by a mortgage on her property. When she arrived, she was told that her $30,000 line of credit had been paid in full and that according to the lawyer who sent the funds, her house had been sold.

This left her quite perplexed, so she followed up with the land registry office. They confirmed the sale of the property for $350,000 and that a new mortgage was registered on the property for $325,000. The woman was stunned to find out that she had been the victim of a title fraud scheme—and that the fraudsters had collected $350,000 on the deal.

Thankfully, in the above case the woman was covered by a Title Insurance Policy which fully covered all her legal fees to remove the mortgage from title and rightfully transfer it back to her. Having the coverage saved her approximately $12,000 in legal fees, time, and stress.

Your home is a sizeable investment and one you worked hard to purchase! Title Insurance can protect you and your property should there be anything that comes up. For the $200-$400 it costs, we feel that’s a low-price tag for peace of mind. Ready to get a quote? Let us help you by contacting us to set up your Title Insurance Policy!

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1. Peace of Mind – having Mortgage Life Insurance creates a sense of security that your loved ones will be well taken care of if you pass on.
2. Mortgage Paid Off in the Case of Death – having Mortgage Life Insurance ensures an extra level of coverage, whereby any other policies that are held will be able to assist with other needs.
3. Family can Stay in their Home – if there is the unfortunate life event that is the death of the Mortgage Life Insurance policy holder, the mortgage will be paid off which will allow the family to stay in their home and not become displaced, causing more despair than needed.
4. It Protects your Family’s Finances – Mortgage Life Insurance pays off the mortgage, which means that your family’s finances stay intact.
5. Lost Wages – if you become seriously ill, Mortgage Life Insurance can cover your mortgage payments for a specified time (ex. up to 3 years). Unexpected life events such as a serious car accident can result in missed mortgage payments because of loss of wages as you need to recover from injuries.
6. Portability –certain Mortgage Life Insurance policies are portable. Which means that if you buy a new property, you will be able to transfer your Mortgage Life Insurance to a new property. Make sure you ask your Insurance Provider if the insurance they are recommending is portable. Take note that when the bank offers you Mortgage Life Insurance you will not likely be able to transfer your Mortgage Life Insurance to a new lender, thereby limiting your future financing options.
7. The Younger you are, the Less Expensive- Which means that this insurance is extremely affordable for a young, and likely, first time home buyer.
8. Good Health = Coverage for Unexpected Illness Later on –After illness strikes, it is more difficult to acquire life insurance.

Mortgage Life Insurance is an option that anyone with a mortgage can consider. However, it is important to know what your options are regarding the Mortgage Life Insurance itself. Asking your Mortgage Broker for a referral to a reputable and credible Insurance Representative is paramount in finding an Insurance Broker that knows available products, that specifically fits your needs. Every individual is unique and needs an insurance product that is fashioned for their individual situation. A good Insurance Representative will be a Broker that knows what insurance products are out there as well as knows what you, the consumer, needs. The great thing about taking on Mortgage Life Insurance is that you can cancel anytime if later you find an insurance product that suits you better.
 
Remember to take inventory of insurance products you are already signed up with. If your employer provides you with a benefits package, make sure you find out exactly how much coverage you have and if that coverage will adequately provide for your financial needs. If it does, then maybe you don’t need any Mortgage Life Insurance. On the other hand, if your current coverage won’t be enough, then maybe a good Mortgage Life Insurance policy is something to consider.
 
For more information regarding Mortgage Life Insurance contact your mortgage professionals at Dominion Lending Centres and we’ll put you in contact with an Insurance Representative that will provide you with viable Mortgage Life Insurance options.

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